Paterson’s pothole plan would boost city’s debt significantly

PATERSON – Mayor Jose “Joey” Torres’ $37 million street repair plan would increase Paterson’s indebtedness by more than 35 percent, according to information in city documents.

But Torres and his financial consultants assured the City Council on Tuesday that Paterson could handle the extra debt for the pothole initiative, largely because the city would use money normally spent on annual street repairs to make the payments on the loan.

Council Finance Chairman Kenneth Morris said he was skeptical when he first heard about Torres’ desire to borrow more than $35 million to fix potholes, saying he was not sure the city could afford the payments.

“I feel better knowing that the plan is to use an existing annual appropriation that would be dedicated towards paying that debt down,” said Morris, a Torres ally.
But Councilman Andre Sayegh, who finished second to Torres in the recent mayoral election, said he was not completely sold on the borrowing plan. “It does seem somewhat exorbitant,” Sayegh said.

Many residents and officials have asserted that the disrepair of Paterson’s streets is one of the city’s biggest problems. Torres said that during the recent campaign residents repeatedly complained about the potholes.

The mayor said the $37 million would cover repairs to Paterson’s 170 primary roads, more than half the streets in the city.

At present, Paterson’s total debt is $99.5 million, said interim finance director, James Ten Hoeve. Under state law, the city’s debt limit is $251.7 million, a cap that’s calculated based on property values, he said.

Officials acknowledged that if the city ever reached its debt limit there would be little chance it could afford to make payments on all those loans. Just two years ago, Paterson had to refinance some of its debt because it did not have enough cash available to make its payments.

Morris said Paterson in recent years has spent between $500,000 and $2 million on annual road repair work. That includes an annual grant from the state that has amounted to about $500,000 in recent years.

Instead of waiting to fix crumbling streets on a year-by-year basis, the Torres bond plan would provide an infusion of money for a massive repair effort now and use the annual allocations to help make payments, officials said.

Torres’ team outlined details of the pothole repair plan at Tuesday night’s council meeting. Morris said it was important for the city to move quickly on the initiative so that work can be done before the winter. “We’re looking at a true timing issue,” Morris said.

What about the roads not on the list of 170 primary streets? Would the city still have money to repair them?

“That’s the question that needs to be addressed,” said Sayegh.

“We’re not going to deplete it all,” said Torres. “I’m just using a portion.”

Morris said the city would be able to tap into other sources to repair streets not on the list of 170. For example, he said, Paterson could use Community Development Block Grant money available for road repairs in low- and moderate-income neighborhoods.

TARIQ ZEHAWI/STAFF PHOTOGRAPHER

In this June file photo, Jasper Street, near the border between Paterson and Haledon is shown. In the foreground, potholes mark the Paterson side. Smooth pavement marks the Haledon portion of the street.

The Torres plan would provide for comprehensive resurfacing of the streets, and not just patchwork repaving, Morris said. The city will have to make sure it hires a capable company whose work would provide new streets with a lifespan of 15 to 20 years, Morris said. In the past, city street repair contractors have fallen short and roads needed resurfacing after a much shorter time, he said.

The city also needs to conduct a careful review of the streets targeted under the program, Morris said. Underground sewer lines need to be checked beforehand to make sure the city does not spend precious money to repairs streets that are vulnerable to sewer breaks, he said.

Officials said they expect the council to take a preliminary vote on the pothole debt plan later this month. Then the proposal must get approval from the New Jersey Local Finance Board before the city can move forward and approve the bonds, officials said.

Bond counsel Glenn Scotland told the council on Tuesday that the plan calls for the city to use short-term bond anticipation notes over the next three years and to convert those notes into long-term debt starting in 2018. That move will allow the city to better balance the impending debt payments, officials said.

The city would end up paying almost $12 million in interest on the road repair bonds if the interest rates are two percent and the payments spread over 15 years, officials said. But members of Torres’ finance team said they hoped to get interest rates closer to one percent.

Paterson’s pothole plan would boost city’s debt significantly

In this June file photo, Jasper Street, near the border between Paterson and Haledon is shown. In the foreground, potholes mark the Paterson side. Smooth pavement marks the Haledon portion of the street.

PATERSON – Mayor Jose “Joey” Torres’ $37 million street repair plan would increase Paterson’s indebtedness by more than 35 percent, according to information in city documents.

But Torres and his financial consultants assured the City Council on Tuesday that Paterson could handle the extra debt for the pothole initiative, largely because the city would use money normally spent on annual street repairs to make the payments on the loan.

Council Finance Chairman Kenneth Morris said he was skeptical when he first heard about Torres’ desire to borrow more than $35 million to fix potholes, saying he was not sure the city could afford the payments.

“I feel better knowing that the plan is to use an existing annual appropriation that would be dedicated towards paying that debt down,” said Morris, a Torres ally.
But Councilman Andre Sayegh, who finished second to Torres in the recent mayoral election, said he was not completely sold on the borrowing plan. “It does seem somewhat exorbitant,” Sayegh said.

Many residents and officials have asserted that the disrepair of Paterson’s streets is one of the city’s biggest problems. Torres said that during the recent campaign residents repeatedly complained about the potholes.

The mayor said the $37 million would cover repairs to Paterson’s 170 primary roads, more than half the streets in the city.

At present, Paterson’s total debt is $99.5 million, said interim finance director, James Ten Hoeve. Under state law, the city’s debt limit is $251.7 million, a cap that’s calculated based on property values, he said.

Officials acknowledged that if the city ever reached its debt limit there would be little chance it could afford to make payments on all those loans. Just two years ago, Paterson had to refinance some of its debt because it did not have enough cash available to make its payments.

Morris said Paterson in recent years has spent between $500,000 and $2 million on annual road repair work. That includes an annual grant from the state that has amounted to about $500,000 in recent years.

Instead of waiting to fix crumbling streets on a year-by-year basis, the Torres bond plan would provide an infusion of money for a massive repair effort now and use the annual allocations to help make payments, officials said.

Torres’ team outlined details of the pothole repair plan at Tuesday night’s council meeting. Morris said it was important for the city to move quickly on the initiative so that work can be done before the winter. “We’re looking at a true timing issue,” Morris said.

What about the roads not on the list of 170 primary streets? Would the city still have money to repair them?

“That’s the question that needs to be addressed,” said Sayegh.

“We’re not going to deplete it all,” said Torres. “I’m just using a portion.”

Morris said the city would be able to tap into other sources to repair streets not on the list of 170. For example, he said, Paterson could use Community Development Block Grant money available for road repairs in low- and moderate-income neighborhoods.

The Torres plan would provide for comprehensive resurfacing of the streets, and not just patchwork repaving, Morris said. The city will have to make sure it hires a capable company whose work would provide new streets with a lifespan of 15 to 20 years, Morris said. In the past, city street repair contractors have fallen short and roads needed resurfacing after a much shorter time, he said.

The city also needs to conduct a careful review of the streets targeted under the program, Morris said. Underground sewer lines need to be checked beforehand to make sure the city does not spend precious money to repairs streets that are vulnerable to sewer breaks, he said.

Officials said they expect the council to take a preliminary vote on the pothole debt plan later this month. Then the proposal must get approval from the New Jersey Local Finance Board before the city can move forward and approve the bonds, officials said.

Bond counsel Glenn Scotland told the council on Tuesday that the plan calls for the city to use short-term bond anticipation notes over the next three years and to convert those notes into long-term debt starting in 2018. That move will allow the city to better balance the impending debt payments, officials said.

The city would end up paying almost $12 million in interest on the road repair bonds if the interest rates are two percent and the payments spread over 15 years, officials said. But members of Torres’ finance team said they hoped to get interest rates closer to one percent.